Teabag Obama!

[Ket]

*The terms "We" and "You" are used generally in this post.

I won't deny that there are people who work the system, but I have to believe they're in the minority.  I agree that they should be dealt with in any way possible, as long as it doesn't involve denying people that deserve those credits.

I've never not gotten a return on my income taxes, and I receive the earned income credit.  Even with that it's a struggle to meet needs sometimes.  So yeah, we can talk about fairness all we want, but all I know is that I really can't afford to pay much more.  That's the bottom line.  And I'm not in massive self-inflicted debt, either.

Working your butt off for it is one thing.  Popping out two children then working the minimum possible to receive the maximum credit?  That's what bothers me.  And sadly, even though only one woman voiced it, I know many more who actually do it. 

And you want to talk about wealthy people spending more?  Maybe not as a percentage.  I save nothing.  I spend 100% of my income; I have no choice.  Now I know that it's still not that much as a solid dollar amount, but there are a massive number of people in my position.  It adds up.

As a whole, those of us with more more do tend to spend more.  We buy more expensive property, higher cost vehicles, more expensive everything in general... etc.  Once you get beyond that, luxury tax can come in.  While I don't think the US has it anymore (not 100% sure on that) there are still luxury taxes out there.  Not only that, but we pay on savings.  All the interest I make on all my accounts is taxed every year.  And while it's not millions of dollars, it still adds up, in my opinion. 

So while all of your available funds are going towards your needs, those who have met their needs already and still have available funds are going to either put them in savings or spend them on some luxury item.  (Luxury in the sense that the item is NOT a necessity)  Either way, that money is still taxed, most of the time doubly taxed. 

Finally, as has been said before and not really responded to, wealthy people have enough money to hire experts to find them loopholes.  They can afford to live wherever they pay the least property taxes regardless of where their employment is based.  There are many ways that they can actively reduce their tax burden.  So, simply saying that their tax rate is too high is a little misleading.

Sure they do, but guess what, you can find these loopholes yourself.  It's public knowledge which states don't have personal property taxes, which have higher paying jobs, where the lowest housing markets are, etc, etc.  Not only that, but you have the opportunity to work at home.  Yes I know, just saying so is much easier than actually doing.  But that still doesn't take away from the fact that you have the chance to do so. 

Simply saying that higher tax rates would be the end all be all to our problems is not the answer.  Between corporation taxes, federal income taxes, state income taxes, personal property taxes, various sales taxes, luxury taxes, and the various fees that many states (who do not have income or personal property tax) charge for items, there really is a lot of money flowing into tax coffers.  It's how that money is spent that is the problem. 

[Zakharra]

This assumption is what I meant, there seems to be this assumption that parents will just let their children starve if we killed food stamps.

Just because people are not being taxed at a higher level doesn't mean people will starve. The children would be fed one way or another.

Massive spending? What was the Iraq war then?

That's only about $600-700 billion over 7 years. Obama is talking about trillions of dollars. that'll make the Iraq war look like lunch money, and saddle the US taxpayers with a huge debt. How will that debt be paid off?

The fact of the matter is, quite a few rich are prepared and willing to pay higher taxes to help get us out of this mess. Those that aren't make up a fraction of the population and are divided against themselves - libertarians, corporatists, and the religious right.

God for them. They can write a check to the government that it will be more than happy to take.

It may not be fair.

It sustained America for fifty years, coming out of the biggest depression of the century and the second biggest in American history.

ONLY when the regulations and high-tax brackets were repealed did America's economy begin to falter.

America's economy was never stronger on the global scale of things than when the top tax bracket was at its highest.

Guess where the top tax bracket resides at the two points in modern history when the American economy is at its weakest?

Reagan lowered taxes from a high of 70% for the top marginal rate and the economy explxoded in a huge surge. The economy expanded drastically, the Dow Jones surged beyond the 5000 mark to top about 14,000. People were getting more money. If more people can keep their money, they will spend it. It's not our or the government's right to say when or were you can spend your money.

You are also linking high taxes and tigher regulations. Those have nothing to do with eachother.

Pensions - granting resources to non-productive individuals. 'Free rides'. Does not matter how you spin it, an economy can only handle so much of that. It is part of the reason for the current crisis on two levels - one being the concentration of wealth, but a major factor is also pensions.

Social Security needs a rethink but it's a surprisingly well thought out program. Pensions are rarely so.

Odd.. that sounds exactly like what Social Security is. A pension program. Except it is from the government, not a company. Soc Sec isn't going anywhere. When the Republicans tried to reform it, they were shouted down by the Democrats and people who view Soc Sec as inviolate. ANY attempt to refom it will be met with very stiff resistance. It's one of the largest parts of the US federal budget, added with Medicare/caid, that is over 40% of the federal budget. With the Babyboomers reaching retirement age, that will have to grow more and more federal money funneled to fund it, raising taxes until they die off in 30-50 years. Where does the government get the money? From the people.

[RubySlippers]

No, I don't think people would starve without federal assistance either.  I may easily be mistaken, but I think that's more or less what Vekseid meant.  People will get what they need, one way or another.  It just might not be pretty.

So, if they earn a dollar, what then?  They get taxed a dime?  It costs the government a lot more than a dime to process each person's taxes every year.  Not exactly calling for smaller government, that.

Its not that hard take it off payroll and that would be maybe1 or 2 cents. My point is everyone should pay the government and there should be few if any deductions. Just a flat payroll deduction of 10% to keep this simple so if a food server earns in a week $400 they would have $40 deducted from that and paid to the government. Once could adjust that for having children as a percentage perhaps of say 1% per child up to four would be fine. And that would be easy to calculate Jane Doe has one child her tax burden is 9% per paycheck. And since its likely done electronically the actual work should not be too burdensome unless one is self-employed. Even then its just 10%. That number could be higher but the point is to keep it honest and the same for everyone with no loopholes or deductions other than for easy to note ones. Children dependent on the worker is easy to verify for example.

[Will]

*The terms "We" and "You" are used generally in this post.

Working your butt off for it is one thing.  Popping out two children then working the minimum possible to receive the maximum credit?  That's what bothers me.  And sadly, even though only one woman voiced it, I know many more who actually do it. 

Like I said, I agree.  *shrugs*

Sure they do, but guess what, you can find these loopholes yourself.  It's public knowledge which states don't have personal property taxes, which have higher paying jobs, where the lowest housing markets are, etc, etc.  Not only that, but you have the opportunity to work at home.  Yes I know, just saying so is much easier than actually doing.  But that still doesn't take away from the fact that you have the chance to do so. 

Well, moving is simply not an option for me, considering all the incidental costs that would involve.  If I could cover those costs then of course I could move wherever I liked, but a lack of money is a lack of options.

And working at home?  Doing what?  I imagine most people would love to be able to work from home and make a living wage.  So why aren't they?  I don't think it's as practical as all that, or even possible in most cases.

[Oniya]

Odd.. that sounds exactly like what Social Security is. A pension program. Except it is from the government, not a company. Soc Sec isn't going anywhere. When the Republicans tried to reform it, they were shouted down by the Democrats and people who view Soc Sec as inviolate. ANY attempt to refom it will be met with very stiff resistance. It's one of the largest parts of the US federal budget, added with Medicare/caid, that is over 40% of the federal budget. With the Babyboomers reaching retirement age, that will have to grow more and more federal money funneled to fund it, raising taxes until they die off in 30-50 years. Where does the government get the money? From the people.

Actually, with the change in demographics, Social Security very well might 'go away' for many of the people currently working and contributing to it.  Why?  People are living longer, the 'baby boomers' are getting older and retiring, and what you (the worker today) contribute goes directly to them, not into a waiting fund for you. 

From a 2005 article: 

The way that the Social Security program is financed, as you probably know, it's a pay-as- you-go system, meaning that today's tax revenues are not saved to pay for workers' own retirements but are used immediately to finance the benefits of their parents and grandparents.

And the reason that's important is because the ratio of the workers to beneficiaries becomes very important in such a system. When there are fewer workers to support each beneficiary, it becomes difficult to pay the benefits that have been promised under current law.

For the past 30 years, the ratio of workers to beneficiaries has been relatively -- has been actually completely flat: 3.3 workers to support every one beneficiary. Over the next 30 years, though, that ratio is going to fall to only two workers to support each beneficiary, and that's going to put a lot of stress on the system.

[consortium11]

Actually, with the change in demographics, Social Security very well might 'go away' for many of the people currently working and contributing to it.  Why?  People are living longer, the 'baby boomers' are getting older and retiring, and what you (the worker today) contribute goes directly to them, not into a waiting fund for you. 

From a 2005 article:

Just to add to this, in 2004 the BBC had a docu-drama about the issue:

http://news.bbc.co.uk/1/hi/programmes/if/3489560.stm

http://www.imdb.com/title/tt0451084/

It's a real issue that people often don't like to talk about. Especially in the UK with a history and culture of running to the government at the slightest hint of trouble, with the grey-vote being the most powerful and life expectencies increasing (but mandatory retirement remaining the same), it's not going to be that long until the party that panders to the retired population wins each election.

[Ket]

Well, moving is simply not an option for me, considering all the incidental costs that would involve.  If I could cover those costs then of course I could move wherever I liked, but a lack of money is a lack of options.

And working at home?  Doing what?  I imagine most people would love to be able to work from home and make a living wage.  So why aren't they?  I don't think it's as practical as all that, or even possible in most cases.

I know moving is not an option for the majority of people.  I was simply stating that these 'tax loopholes' are public knowledge. 

There are actually MANY jobs that are now done at home.  Yes, the initial cost is on that of the person wanting to work at home, however, it can and many times does pay off.  I'm not saying it will make a person rich, but I know several people who live quite comfortably while working from home.  For example, many times, when you call a large national company's customer service, you are reaching someone who is sitting at home in front of a computer with a head set.  Sometimes for tech support too.  (The two I know of off the top of my head are Apple and Barnes and Noble)   It's lower cost for the company, as they don't have to provide a building for people to work at, which would need to be maintained, etc.  A lot of companies allow employees to telecommute, so they are only at work once a week or so.  It's just about finding that particular job.

Yeah I know, easier said then done, like I said before.  But if one really truly wants something, then they have the motivation to go out and get it. 

[Will]

I didn't mean the loopholes were shady, or anything like that.  Loopholes is probably the wrong word, anyway.  They are definitely public knowledge.  I just meant that they are not just difficult, but in actuality, impossible, for most people to take advantage of.

I really didn't know that about the customer service from home thing.  That's pretty awesome.

[Oniya]

There are actually MANY jobs that are now done at home.  Yes, the initial cost is on that of the person wanting to work at home, however, it can and many times does pay off. 

A number of non-phone-based jobs can be done from home also.  Frequently, you need to work at the company for a while, but anything that requires nothing but typing can be accomplished with Fed-Ex (or electronic transmission), a telephone (for conferencing) and a shredder (for confidential stuff).

[The Dark Raven]

I didn't see this in here but....just to fall in with the historical nature of my family (rebel-rousers all)....

There's this uproar about taxes...I'm not exactly sure what because politics make my brain hurt...they're all eejits.

But...

What I want to know, if the President is not proposing this, is why the "rich" (ie, people who make more than $100,000 /yr) aren't taxed on that income over and above $100,000?  Shouldn't they be taxed on all that free and clear income they get, while the most of us in the generation ponying up their Social Security to be make $20k to $30k/yr and get stuck with the taxes too....?  Oh, and are the FIRST to be fired/laid off in "tough economic times" because we have less valuable experience.

My two ranty cents...may my ancestor applaud in his grave and everyone here not grow to hate me too much... ;-)

[Zakharra]

 I could go for that, as long as it is an equal % of the total income. There is NO reason they should be taxed at a higher rate simply 'because they can afford it'.

[Nessy]

The whole concept of a progressive tax is based on the idea that 10% for the poor is the difference between freezing to death in their home or starving. Don't tell me it doesn't happen. It did. While 10% for the rich is the difference between what model of car they might pick. Progressive taxes also work the same for everyone.  No body pays on the first 8,000 dollars (using a number here not exact), and then everyone pays something like 10% from 8,0001 to 32,000.  It's not like we take the rich's income and force it into the last bracket, it's spread out over all the brackets. so those who say they are paying say 40-50%, that might be their average but they are still getting that first 8,000 tax free. And for those idiots (not referring to anyone here, as far as I know this arugment hasn't come up here yet)who whine about working more and all their money going to taxes if they get put into another tax bracket, that's not how it works. If there is a tax bracket that is 10% up to 35,000 and it jumps to 15% after that and you make 35,001, guess what, you are paying 15% on 1 dollar, 1 dollar.

Where the tax code gets messy is all the deduction's and the credits and the exemptions, and guess what, most of those were pushed for by lobbyist, and while certain poor groups have lobbyist, there are a heck a lot more on the other end.

If you want to talk about tax inequalities, let's talk about the single tax payer versus the married and those with families. In some cases the married might wind up with higher taxes but in most cases, no. And those with kids, why should other tax payers fit the bill for your reproduction. They already fit the bill for things like education and in many cases, health insurance for the low income children. And what about people with houses, why should anyone have to help others with their mortgages? Or public transportation, bike trails, national parks. Heck I am sure if we go down the list far enough we'll eventually hit something you care about and there is the problem.

The tax problem isn't our tiered system its what happens when people get ahold of it and put what they care about in the tax code.

By the way, there is nothing wrong the USD or anything inherently evil with debt, but if anyone is no longer interested in the USD I will be happy to take them off your hands.

[Zakharra]

 The problem is there are those that think the more you make, the more government should take. 35%  45% 50% 60%  70%  90%  There are those that think the wealthy should pay 'far' more of their income in taxes because they are rich and can afford it. Even though more money being taken from the wealthy will not improve the life of the poor, as long as the rich get it stuck to them, it's ok.

That might not be true, but that is the attitude that comes across heavily in the news I read and hear. That the rich deserve to have it taken away.

[Vekseid]

This assumption is what I meant, there seems to be this assumption that parents will just let their children starve if we killed food stamps.

Just because people are not being taxed at a higher level doesn't mean people will starve. The children would be fed one way or another.

By hook or by crook, no matter the fairness. Food riots may not happen in America, but the reason is because of such social programs.

That's only about $600-700 billion over 7 years. Obama is talking about trillions of dollars. that'll make the Iraq war look like lunch money, and saddle the US taxpayers with a huge debt. How will that debt be paid off?

...the heck are you getting your figures?

Total allocation for the Iraq War so far is $907 billion over seven years, and it's largely externalized - that is, oriented outside of the country and worse, towards the destruction of wealth rather than the construction of it.

The stimulus is only $787 billion. Obama has rather little to do with the bank bailouts, which Obama did not have a say in as they were largely enacted before the elections. Where is he talking about trillions?

God for them. They can write a check to the government that it will be more than happy to take.

Alternately the ones who don't like it can take a hike to a libertarian paradise like Somalia. I'm sure they'll enjoy it there.

Reagan lowered taxes from a high of 70% for the top marginal rate and the economy explxoded in a huge surge. The economy expanded drastically, the Dow Jones surged beyond the 5000 mark to top about 14,000.

Oh really? Seriously, where are you getting your data?

People were getting more money. If more people can keep their money, they will spend it. It's not our or the government's right to say when or were you can spend your money.

As does the government. People get the money that gets spent. Only, it stays within the country - usually for a minimum of two cycles.

You are also linking high taxes and tigher regulations. Those have nothing to do with eachother.

We only have a few datapoints, really. We know some things that don't work at all, and only a few suggestions as to what works really well.

Odd.. that sounds exactly like what Social Security is. A pension program. Except it is from the government, not a company. Soc Sec isn't going anywhere. When the Republicans tried to reform it, they were shouted down by the Democrats and people who view Soc Sec as inviolate. ANY attempt to refom it will be met with very stiff resistance. It's one of the largest parts of the US federal budget, added with Medicare/caid, that is over 40% of the federal budget. With the Babyboomers reaching retirement age, that will have to grow more and more federal money funneled to fund it, raising taxes until they die off in 30-50 years. Where does the government get the money? From the people.

Ideally it would have a ten year collection limit. Safety nets (which is why it's called social security) are good. Desperate people do desperate things.

[Zakharra]

 

...the heck are you getting your figures?

Total allocation for the Iraq War so far is $907 billion over seven years, and it's largely externalized - that is, oriented outside of the country and worse, towards the destruction of wealth rather than the construction of it.

The stimulus is only $787 billion. Obama has rather little to do with the bank bailouts, which Obama did not have a say in as they were largely enacted before the elections. Where is he talking about trillions?

I was quoting the Iraq war, not adding in Afghanistan to the cost. War itself is a waste, so nothing new there. The link you provide lists Iraq and Afghanistan as one cost. It lists Iraq as costing $657.3. With an additional $52.7 for supplimental spending, pushing the cost to about $710 billion.

  Reagan's lowering of the tax rate helped the economy in the long run. Including the Dow Jones. I should have said the time from then to now. It DID rise to nearly 14k. When Reagan took office, it was 875.85, when he left office the DJI was 2,158.04. Black Monday was merely a blip in the road. Since then it's steadily risen higher and higher. It's fallen recently, but is still far above the 1988 level, and it will rise again.

Obama is planning to spend $3.6 trillion in his budget. $5oo billion more than Bush's. The next years will be even higher. Not only is Obama promising a bigger budget, but he's promising to cut the deficit in half as well. How will he do all he's promising? Where will he get the money?

His stimulus package, which is HIS spending plan, not Bush's,

Sen. Charles Schumer, D-NY, said the amount set aside for a new stimulus package could equal or surpass the $700 billion designated for the TARP fund, more than half of which has been used to shore up U.S. banks and insurer American International Group Inc.

Martin Baily, who was the White House’s chief economist under President Bill Clinton, told Bloomberg that the stimulus could exceed $1.2 trillion. That would dwarf the $175 billion package Obama proposed just one month ago, and even the $168 billion tax-break stimulus package President Bush issued earlier this year.

(from last year) On Monday morning in Chicago, Obama will introduce key members of his economic team -- Geithner and soon-to-be National Economic Council director Larry Summers -- and will reiterate what he said in his Saturday weekly radio address: that he will push for a massive stimulus package proposal, one much larger than the $175 billion he proposed as a candidate, perhaps as high as $500 billion.  Obama is not expected to give a specific price tag for the stimulus package on Monday.

.. and he and his party are making plans to spend even more.

By hook or by crook, no matter the fairness. Food riots may not happen in America, but the reason is because of such social programs.

Or by the fact of others providing food (soup kitchen type outfits, food banks) or the families feeding their children. The parents need to take some responsibility in caring for their family. A government handout should be one of the last things that should be offered.

[Oniya]

My mother-in-law sometimes volunteers at a food bank.  The problem is, with the economic crisis, donations are drying up, and people seeking aid are lining up.  The food has to be purchased by somebody, and when money gets tight at home, donating to others is the first thing to be cut.

[Vekseid]

  I was quoting the Iraq war, not adding in Afghanistan to the cost. War itself is a waste, so nothing new there. The link you provide lists Iraq and Afghanistan as one cost. It lists Iraq as costing $657.3. With an additional $52.7 for supplimental spending, pushing the cost to about $710 billion.

  Reagan's lowering of the tax rate helped the economy in the long run. Including the Dow Jones. I should have said the time from then to now. It DID rise to nearly 14k. When Reagan took office, it was 875.85, when he left office the DJI was 2,158.04. Black Monday was merely a blip in the road. Since then it's steadily risen higher and higher. It's fallen recently, but is still far above the 1988 level, and it will rise again.

Well if you're going to use the DJIA as an economic marker:
http://stockcharts.com/charts/historical/djia19802000.html

Why did it rise -faster- under GHWB's and Clinton's tax hikes?

More to the point, though, ignoring the rising income inequality during Republican terms:

http://forecasts.org/data/data/GDPC96.htm
1981-01-01   5307.544
1989-01-01   6918.116

Real GDP growth over Reagan years: 30.345%

1993-01-01   7459.718
2001-01-01   9875.576

Real GDP growth over Clinton years: 32.385%

Obama is planning to spend $3.6 trillion in his budget. $5oo billion more than Bush's. The next years will be even higher. Not only is Obama promising a bigger budget, but he's promising to cut the deficit in half as well. How will he do all he's promising? Where will he get the money?

I don't believe Obama's going to be keeping many promises. Unless he wants to convince the treasury to print a few trillion. He did insist that the budget would be combed through, but I doubt it will account for that.

Regardless, blaming Obama for non-discretionary spending and war costs is ridiculous.

His stimulus package, which is HIS spending plan, not Bush's,

.. and he and his party are making plans to spend even more.

He's following Keynes. There are other schools of economic thought.

Or by the fact of others providing food (soup kitchen type outfits, food banks)

...were you paying attention to the news last November?

[consortium11]

He's following Keynes. There are other schools of economic thought.

While it's seemingly the in-thing to label any government spending "Keynesian", he isn't following Keynes.

Keynes entire theory was based upon taking money out of the economy during the good times so it can be injected during the bad. Whether you believe this works or not is another arguement... the simple fact there is no savings for Keynes's theory to work with. Running at a deficit and then spending money is pretty much the antithesis of Keynesian economics

[Nessy]

While it's seemingly the in-thing to label any government spending "Keynesian", he isn't following Keynes.

Keynes entire theory was based upon taking money out of the economy during the good times so it can be injected during the bad. Whether you believe this works or not is another arguement... the simple fact there is no savings for Keynes's theory to work with. Running at a deficit and then spending money is pretty much the antithesis of Keynesian economics

I understand what you are saying but are you actually suggesting that Keynes theory was only to be applied after there was savings? That the only countries that could adopt his plan would have had to have a surplus before doing so. I don't think that was his intention at all. Think of it as starting at point zero where deficits initially during a down economy are necessary. The problem isn't is the deficits during the down time, although that's all anyone can talk about now, it's the refusal to pay it down during the up tick. You know when everyone is raking it in and few seem to care about the debt.

[OldSchoolGamer]

Well if you're going to use the DJIA as an economic marker:
http://stockcharts.com/charts/historical/djia19802000.html

American capitalism has gotten so far removed from the actual production of goods and services of value to real people that to me the stock market really isn't a valid economic indicator--if it ever was.

At this point, it's really more a marker of how much fiat money the government is pouring into the economy in desperation than it is of real economic performance.  Consider the last rally...what was it based on?  What has changed?  The government has poured out over a trillion dollars and all we're seeing is "signs the bottom may be near?"

Obviously, once the fiat money runs out, the free-fall will resume.  The hole opened up by even a 10% shrinkage in the value of derivatives is around $45 trillion.  So we've filled, what, about $5 to 7 trillion if you add up reflationary efforts of central banks around the world?  That leaves around $40 trillion left...and if you look at what's happened to the valuation of actual, verifiable assets (like real estate and stocks) with firm connections to the real world, a 10% decline is a ludicrously conservative estimate of what's happened to the flim-flam paper of collateralized debt obligations and credit default swaps.  I'd say 25 to 40% is a more realistic estimate.

[Zero]

On a funny note...

Texas threatened to Secede from the Union, Oh no Texas! Don't do it, you've lived such a long life with us...

[Avi]

During the Bush years, the Democrats were saying that dissent 'was' American. Now that they are in power, they are working to make those who do disagree with them, look small and try to  brush them off.

The way that I read the report was that they were not saying all right-wing protest is dangerous.  But rather, they were targeting groups like neo-Nazis and other white-supremacist groups who might use the economic situation and the fact that we now have a black president to rile up supporters in the hope of inflaming anger, racism, hatred, and violence. 

For me, there's a very big difference between dissenting with what the government and advocating an open, armed rebellion against the government that (NEWS FLASH!) the people of the United States voted into office in accordance with the guidelines set down in the Constitution of the United States.  For me, it seems rather hypocritical for some conservatives (not all of them, many whom I know are quite reasonable and are respectable people) to wrap themselves in the Constitution and then advocate taking up arms against the government which that very document provided for.

Just a thought.

[consortium11]

I understand what you are saying but are you actually suggesting that Keynes theory was only to be applied after there was savings? That the only countries that could adopt his plan would have had to have a surplus before doing so. I don't think that was his intention at all. Think of it as starting at point zero where deficits initially during a down economy are necessary. The problem isn't is the deficits during the down time, although that's all anyone can talk about now, it's the refusal to pay it down during the up tick. You know when everyone is raking it in and few seem to care about the debt.

It's hard to say exactly what Keynes thought in a practical sense because The General Theory... is such a theoretical book, and it's only since then that others have tried applying it in a practical context. While people try to use deficit spending and Keynsian interchangeably, they're not. The only real evidence is that within the General Theory Keynes started by saying the government should save rather than spend money... and from there built the rest of the theory.

[Nessy]

It's hard to say exactly what Keynes thought in a practical sense because The General Theory... is such a theoretical book, and it's only since then that others have tried applying it in a practical context. While people try to use deficit spending and Keynsian interchangeably, they're not. The only real evidence is that within the General Theory Keynes started by saying the government should save rather than spend money... and from there built the rest of the theory.

Understood. My understanding of the General Theory by J.M Keynes is that there was no discussion of the use of monetary or fiscal policy. So if you are going to use his theories in a practical situation, you would would have turn theory into action. Otherwise its just a theory. The Keynesians did adopt the multiplier model (again not in the original Theory) on the basis of using it with Keynes ideals in mind, that fact that it was not in the original treaties itself, in itself, does not mean it was not Keynesian. Adopting certain models and practices to create a Keynesian model as opposed to just reading The General Theory in order to best capture the theories in The General Theory is an attempt to use his ideas in the real world, and while I don't think that process will ever lead to a perfect translation, it is a good attempt.

The multiplier model would suggest that spending during low economic terms does help. People can debate which helped more WWII or the New Deal, but what most people fail to understand is that economically, they're one in the same. The government spent a lot of money building roads and keeping people from starving, and they spent a lot of money building ships and tanks and weapons. The keyword is spend, not socialism or war. Theoretically, you might have been able to achieve the same results if you built all those ships and weapons and just sank them in the sea when you were done. It wasn't the death and destruction of the war that spurred economic growth, it was spending. The death and war and the destruction encouraged the spending, made it politically possible to do it but who says it was economically necessary to have the "need" of death and war to build these things. We're capable of knocking down old buildings and building new ones on our own after all.  It's not a perfect example, but I am basically taking a real world situation and creating a theory out of it by removing things like the human and political components, which, of course, you can't do in real life.

Anyway, my point is that spending hasn't been disproved as effective if you keep in mind that wars require government spending. More modern wars, however, are a bit different in that a lot of weapons and what we are using in general are being pulled from inventory so the manufacturing part is partially removed and because of how globalized the military is (we don't make it all ourselves anymore).

I do not think, however, that Keynes intended for governments to save indefinitely. What is the point of saving if you never intend to spend. Saving generally has an ending point or for something that doesn't have a foreseeable life, a stopping and starting point. Logic would suggest that you are saving to spend at another time and for now, the time is during down times and the saving during the upticks. I think the saving part keeps getting skipped over because there is so much political maneuvering going on that even when we are at full employment (which is not now), it is difficult for our government to cut back because while everyone wants the government to spend less, no one is willing to give up the projects that are important to their local forcing their reps to cater to their votes. It's pork when you live in Texas and its being spent in Florida, but suddenly its important when its in your background (states are just examples, i live in neither).

edit addition: And I should have mentioned the spending is politically difficult to achieve because people suddenly pay more attention to what is being spent when they're struggling themselves and are being asked to help someone else or just give up some luxuries.

[Nessy]

On a funny note...

Texas threatened to Secede from the Union, Oh no Texas! Don't do it, you've lived such a long life with us...

Not to sound old school, but since one of the Representatives of the current government is actually encouraging this blimp of nostalgia,this revival of a revolution as a good idea that never worked out well for them the first time around, isn't that something along the lines of treason? I mean there is dissent and then there is open rebellion with the intent to basically break up the state. I just don't get these hard right rallying points. Tea party, since when is loosing an election mean you have no representation, and to the best of my recollection, parts of the south tried to break up the union before, and they lost that too.